China has the biggest community of Bitcoin miners in the world, but the hot topic around them currently is whether or not they are welcome there – or, rather, whether Bitcoins in general are a currency China want transacted within their borders.
The simple answer is an unfortunate no, as the country has begun to crack down on Bitcoin use. From Bitcoin dice, to retail transactions, Bitcoin users could find themselves unable to use this digital currency, or at least find the currency to become highly regulated, but what exactly can we expect in the coming years?
Is Bitcoin Trading Allowed?
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Trading Bitcoin in China is still technically allowed, but the conditions in which you can trade Bitcoin take away some of the biggest reasons as to why Bitcoins are popular in the first place – privacy and speed. Bitcoin trading can only take place in over-the-counter markets that are slow and tedious, and are even thought to increase credit risk, which eliminates the safety aspect also.
What Are China Doing?
China’s regulation first began when they banned Initial coin offering – or ICOs – but it didn’t stay this simple for long. They went on to encourage local exchanges to stop trading, discouraged mining altogether and have even made moves to stop Chinese companies with presence abroad from skirting around the ICO ban. Focus now, however, has moved away from businesses and onto honing in on a more domestic level of regulation. There’s even talk of blocking domestic access to mining, storage apps and online platforms. The Ministry of Industry and Information Technology, the central bank and the cyberspace administration have all come together to fight the rise of Bitcoin, but why is this the case?
Why Are They Cracking Down?
The removal, or reduction of risk from financial markets is a big thing in practically every country, but none more than China. Some main concerns that China are facing include:
- The boom of the shadow banking sector – a potential way to access unregulated loans.
- The movement of money outside of China – Bitcoins allow for easy transactions overseas, and this could only prove to make the already concerning speed of money movement so much faster.
However, it appears that while China are looking to crackdown on Bitcoin specifically, they aren’t cryptocurrency-shy. In fact, the People’s Bank Of China is running trials for its own cryptocurrencies, which would make it the first traditional bank to offer and issue digital money transactions. In fact, it appears that China’s distaste for Bitcoin isn’t so much the cryptocurrency itself, but the lack of control that they have over its transactions and activities.
China’s regulation of Bitcoin doesn’t appear to be slowing down any time soon, so if you’re in China and are looking to invest in Bitcoin, it may be worth waiting until it becomes clear just what the future of the currency within the country looks like. Control over the currency within the country is an understandable goal from the government, however this control takes away some of Bitcoin’s key values of privacy, speed and a decentralised, unregulated form. What the future holds has yet to be seen – only time will tell, so watch this space.